So, I’ve been trying to buy a house. And my offer was just accepted. And if I basically almost empty my checking, savings, and brokerage accounts, plus some help from my parents, I’ll be able to pay the down payment. And if I can rent out three bedrooms (it’s a 4-bedroom house), the total mortgage payments won’t be THAT much more than what I’m currently paying in rent. And I have to buy a washer/dryer and a fridge. So, I’ll basically be writing someone a check for [DrEvil]One Hundred THOUSAND Dollars[/DrEvil]. And that’s just the down payment.
Gack!
(Does anyone know what the rules are on taking money out of a 401K account to purchase a first residence?)
Well, your down payment would almost buy my house when I bought it. (Would probably sell for $150,000 to $175,000 now)
But then I see your location and I understand.
They bought the house in the early '60s for something like $28,000. After they died my dad and uncles sold it for $1.3 million. The proceeds will help pay for my collage education.
Congratulations! Welcome to the Underworld of the Walking House-Poor. You can withdraw money from your 401k plan for a downpayment of your primary first residence. It generally counts as a hardship-withdrawal and follows those rules. To get more specific details, you will have to talk to your plan provider. It varies from plan to plan.
I really like Palo Alto. I wouldn’t mind living there. I got to live there for 3 mos in 1996 when I was working for an internet start up, before they relocated my department up here. Then in 1997, I spent another 10 weeks down there training for a new position.
Tell me, is the Village Cheese Shop still there? in Town and Country village? We used to go there for lunch a lot. And we used to shoot pool a lot at a pub…ugh…can’t remember the name. There were like 15 of us training and we used to go quite often. I want to say it’s called The Blue Cue, but since that’s a pool place here, I’m sure I’m wrong.
I spoke to my 401k advisor (for lack of a better term) today concerning just that. For me it would be a hardship, taxable as income for Tax Year 2005 at normal state and federal rates. Not all that bad. But the killer was no contributions into my 401k for six months, plus no corporate matching funds, either. Plus something about a 10% penalty, but by the time he got to that, I had decided against it for my situation.
How are you going to pay the mortgage every month (not to mention your other bills) if you can’t find renters, or you lose your job, or you become disabled for a while, etc.? And with emptying the brokerage accounts, are you just not going to retire now?
I hope this works out for you but seeing as you have left yourself with NO safety net of savings, I don’t see how this house is a Good Thing. Care to fill in a few details (millionaire grandfather about to die or something)?
Having never been to California, maybe I just don’t “get it.” Is living there * worth* paying half a million bucks for an average sized house?
I’m not trying to be a downer here. There’s just some stuff I wanna know because I’m curious about stuff like this. I’ll probably be buying a house myself in the next 5 years:
I, too, live in a part of the country where real estate prices have been flat for the last 20 years. Your downstroke would buy a pretty nice home here.
Welcome to the world of homeownership. Just remember, it’s a labor of love. :)d
I built my house nine years ago. It has 2100 square feet of heated and cooled space, a two and a half car garage, a 20’ X 40’ patio and sits on almost 1 and a half acres. The cost to build it was $98,000. It’s now valued at $145,000. I shudder to think what it’d cost in California.
Anyways, MaxTheVool congrats on the house and I hope it all works out for the best.
I was being a little overdramatic in my description of it…
I have renters lined up already, and I won’t be QUITE totally emptying all my accounts. And, anyhow, isn’t this what I’ve been saving up for?
And I’m pretty sure that if I had no renters at all, I could barely make the mortgage payments with just my paycheck if I lived VERY frugally.
Obviously, if I lose my job, I’m in trouble. But living in constant fear of that seems pointless.
In a nice Northern California suburb where you could get 1.5 acres of land – say, Pleasanton – about $1m. Stick it in the Valley somewhere, like near Modesto – maybe $250k.
In fact, I’m sitting in that house right now, on the floor, in the living room, using my spanking-fast new cablemodem service.
Upsides:
-I own a house
-I own a washer/dryer, for the first time ever. I’m using it right now. In my garage. In my house. That I own. Tee hee
-The fridge was just installed
Downsides:
-The phone wiring is messed up, so none of the jacks work (fortunately, my friend from high school works on that kind of stuff for a living, and is coming over to work on it)
-The upstairs cable jacks (including for cablemodem) don’t seem to work. A technician is coming out on Tuesday to look at it
-There’s still a lot of stuff in the old apartment, although we moved all the big stuff
Oh, and I rented a super-enormous U-Haul. I felt like a was driving a tractor trailer. It was a stick shift (which I’m not very comfortable with), and had a little button to lower the truckbed down pneumatically. It was awesome, except for the part where driving something that big was totally nervewracking.
Overall, though… WOO HOO!!!
